A tax on sewer and water usage, revenues from which will go to Chicago’s four pension funds, received final approval from city lawmakers on Wednesday.
This move comes on the heels of several other tax hikes designed to help improve the funding of the city’s pension funds, which are flirting with insolvency.
The tax, passed in a 40-10 city council vote, is projected to raise an estimated $240 million a year once it is fully phased in over five years, helping Chicago gradually increase contributions to its municipal retirement system, which is projected to run out of cash within 10 years.
Chicago has already authorized a phased-in $543 million property tax for its police and fire retirement systems and a telephone surcharge increase for its laborers’ pension fund.
For the municipal fund, an actuarially required funding level would be reached in 2023, when the payment would spike to nearly $879 million from $577 million in 2022, according to city documents. The aim of the plan is to bring the retirement system’s funded level to 90 percent in 2057.
Some aldermen have raised concerns that even with the new tax revenue, the city will be short $300 million in 2023.
The city’s next step involves the Illinois Legislature, which will be asked in November to approve the new funding schedule for the municipal system, as well as one for the laborers’ fund.